Calling all Economists

[bobdelt]

Originally posted by: JS80

Originally posted by: QurazyQuisp

Originally posted by: JS80

Originally posted by: simms

Originally posted by: JS80

Originally posted by: dirtboy
How about... China will stop buying mass amounts of US currency which thus means interest rates rise that are artificially low right now. Rising rates lead to a recession, which will lead to a downward cycle in the stock market and the further collapse of the real estate market that is hanging on right now by a thread. A decrease in spending during the recession will cause employers to reduce spending, freeze hiring and increase layoffs. All which will cause the stock market to further decline and your roommate to profit.

It's not a clear thought, but you can get my point if you try.

China buys US currency? I think you mean US Treasuries. If we keep constant our imports of Chinese goods and send them US dollars, aren't they going to purchase US Treasuries or US goods? After all US dollars are only good in the US.

They accept US dollars in France?

The US dollar is highly regarded as the world wide currency of choice. There are several countries (especially in central america) that use US dollars because of the high variability of their local currency's worth.

On top of that, many country to country trades are made in US dollars.

:roll:

Actually its true. The US dollar is a "vehicle currency". When 2 countries trade, they use a mutual agreed upon currency, the dollar. This is where the euro is posing to be a great threat.

Many countries have their currency pegged to the dollar, or actually just use the dollar. And yes you can use your dollars in france. If I was selling something and you offered me euros, I'd take it, you may have to offer a premium.

 

[smack Down]

What makes you so sure that the china stock market didn't go down because of weakness in the US economy?

 

[gsellis]

Originally posted by: bobdelt

Originally posted by: gsellis
If it relates to today, I suspect that this is just a market correction fueled by Wall St. style idiots. China's new market was mostlikely over bid. Kind of like Google stock because it was 'hot'.

Google stock is not over bid. Please explain without using the nominal price of the share, but market cap instead.

137B. It is overpriced. They don't own that much in assets or IP. Consider that Merck is only worth 94B. MSFT is 237B, but has a much more tangible market.